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Walmart Case (Difficulties in Emerging Markets (4 New and Smaller Stores…
Walmart Case
Difficulties in Emerging Markets
Argentina and Brazil
"Everyday Low Prices"
Brutal Competition
Own Mistakes
"the Wal-Mart Way" vs.Local Suppliers and Employees
Result: Red Ink
Markets that don't align with the Efficiency / Economies of Scale Principles of Walmart
4 New and Smaller Stores
Add 8 Stores Next Year
Deep Pockets
$105 billion in Sales and $3.1 billion in Profit
Opening 100 Domestic Stores Today
Opening 150 Domestic Stores 1999
Need for New Markets
Global Expansion, i.e. Asia and Latin America
North America $24 million Operating Profit
Losses Forecast
Estimated loss of $20-30 million in Brazil
$48 million losses due to Start-up in L.A.
Little Product Differentiation / Quality Differences
Competitors Moving with Prices and Promotions
Competition is Aggressive
Competitors have Lower Stock Levels
Obstacles for Expansion
No Established Reputation
Different Product Demand
Distribution Problems
Tough Competition
Distribution Problems
Timely Delivery is Hard
Cannot Control In-Time Deliveries
Issues Related to Easy-to-Hadle Packaging and Quality Control
Various Mistakes
Walt-Mart did not anticipate the Market
Tax Miscalculations
Slow in Cultural Adoption
Problems Called Temporary
Inevitable Problem when Entering the Market
Hard to Recruit Good Managers